Evaluating Your Business Idea

Evaluating Your Business Idea.

Before you make any life-altering changes that can’t easily be undone, take some time to first evaluate your business idea to see if it has the legs you hope it does. You’ve spent months or maybe even years searching for the perfect small business idea, and now you think you’ve found it. You’re ready to dive right in, quit your job, and dedicate yourself to starting your own business. The very first step of the process is to do some research and analysis to dig into the potential of your idea.

Here are a few ways to get you started.

Know What Makes Your Product or Service Different

A USP identifies what makes your business different, and why your target clients should choose you over the competition. Your USP can be a very effective tool that helps you define your brand and make your business memorable. During your research, you will probably discover that there are other businesses already offering the same or similar products and services to your target market.

This doesn’t necessarily mean you won’t be successful if you launch your business, but it certainly means you need to identify what makes your products and services different from the competition. You can do this by creating a unique selling proposition (USP).

Conduct a Financial Feasibility Analysis

How will you bridge the financial gap between the start-up process and profitability? Another very important factor that plays into the validity of a small business idea is money. What will it cost to get your business off the ground? Where will that capital come from? What are your start-up and ongoing expenses? What is your earning potential once you’re up and running?

You will want to make sure you consider all potential capital sources, while you think about how you can bootstrap and limit the investment needed up front.

Identify a Target Market

You need to create a picture of your ideal customer. Consider factors such as age, gender, education level, income, and location. The most important step of qualifying a business idea is determining who will be buying your product or service. The more you can narrow down the picture of your ideal customer the better. You won’t be able to figure out if there is a market for your product or service until you have a very clear idea of who are selling it to.

Then, you need to conduct a market analysis. It can also be helpful to create a test segment of your target market and conduct a focus group or a survey to find out who they really are.

Do research to determine how big the market is, how saturated it is and if there is room for you to add your product or service to the mix. Then, you can decide if it makes sense to launch your business to a segment of your market to gauge response before committing fully to your business idea.

Research the Competition

Just as you need to know who your ideal customer is, you also need to know who else us out there marketing to them. This is why it’s really important to get an idea of who your competitors are before you move ahead with your business idea.

This may all seem like a lot of work, but you will be glad you did it. If you determine that your business idea isn’t going to work, you may be disappointed but you will avoid wasting time and money on a likely failure. If it looks like your small business idea has potential once you’ve done your research, you will have a running start for the next step of the business start-up process — creating a business plan. For more help, read: creating a business plan.

I have discussed in my previous post how you can look at some of your competitors’ websites to get an idea about building your own website. It is important to have a website for your business. This is your home base and all of your internet endeavours will run to and from it. As a starting point, you can contact an online media consultant to help set-up the website per your requirement. Selecting a domain and figuring out a quality hosting plan to get off the ground, the design and layout of your site, all of these can be taken care of by HyperEffects. You may also use the insights you gleaned from your competitive research and select something that’s clean, engaging and simple.